EMPLOYMENT AGREEMENT

Employment Agreement

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XL Capital Ltd | XL INSURANCE LTD | XL RE LTD

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Title: EMPLOYMENT AGREEMENT
Governing Law: New York Date: 11/9/2006
Industry: Insurance (Prop. and Casualty) Sector: Financial

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

(dated as of September 29, 2006)

AGREEMENT, made and entered into as of the date first above

written, by and between, XL Capital Ltd, a Cayman Islands corporation (the

"Company"), and James H. Veghte (the "Executive").

WHEREAS, the Executive has been in the employ of the Company

and certain of its subsidiaries;

WHEREAS, the Company and Executive desire to continue such

employment and to memorialize the terms and conditions of such employment by a

written agreement;

NOW, THEREFORE, in consideration of the premises and mutual

covenants contained herein and for other good and valuable consideration, the

Company, the Guarantors (as hereinafter defined) and the Executive (the

"Parties") agree as follows:

1. EMPLOYMENT.

The Company hereby employs the Executive, and the Executive

hereby accepts employment with the Company, for the term of this Agreement as

set forth in Section 2, below, in the position and with duties and

responsibilities set forth in Section 3, below, and upon such other terms and

conditions as are hereinafter stated.

2. TERM OF EMPLOYMENT.

The stated term of employment under this Agreement shall

commence on the date first above written (the "Date of the Agreement") and shall

continue through the close of business on the first anniversary of the Date of

the Agreement, subject to earlier termination as provided in Section 8, below,

and extension as provided in the next succeeding sentence. On the first

anniversary of the Date of the Agreement and on each anniversary thereafter, the

stated term of employment shall be automatically extended for an additional one

year unless the Company gives notice in writing to the Executive or the

Executive gives notice in writing to the Company at least six months prior to

such anniversary that the term is not to be so extended.

3. POSITIONS, DUTIES AND RESPONSIBILITIES.

(a) GENERAL. The Executive shall be employed as the Chief

Executive Officer - Reinsurance General Operations of the Company. In such

position, the Executive shall have the duties, responsibilities and authority

normally associated with the office, position and titles of such an officer of

an insurance, reinsurance and financial services company, or holding company,

whose shares are publicly traded in the United States. In carrying out his

duties and responsibilities, the Executive shall report to the Chief Operating

Officer of the Company. During the term of this Agreement, the Executive shall

devote his full business time to the business and affairs of the Company, and

shall use his best efforts, skills and abilities to promote the Company's

interests.

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(b) PERFORMANCE OF SERVICES. The Executive's services under

this Agreement, which are global in nature, shall be performed at the location

or locations reasonably requested by the Company. The Executive acknowledges

that the Company may require the Executive to travel to the extent such travel

is reasonably necessary to perform the services hereunder and that such travel

may be extensive. To the extent reasonably requested by the Company, the

Executive shall allocate greater business time to a location other than his

principal business location, and if reasonably requested by the Company, the

Executive shall relocate to such other locations. Any such relocation will not

be considered to be a breach of this Agreement.

4. BASE SALARY.

The Executive shall be paid a Base Salary by the Company equal

to US$500,000 payable in accordance with the Company's regular pay practices.

Such Base Salary shall be subject to annual review in accordance with the

Company's practices for executives as in effect from time to time and may be

increased at the discretion of the Compensation Committee of the Company Board

(the "Compensation Committee").

5. BONUSES.

In addition to the Base Salary provided for in Section 4,

above, the Executive shall be eligible for an annual cash bonus under the

Company's Annual Incentive Compensation Plan as in effect from time to time,

with a bonus opportunity which is substantially similar to that of similarly

situated executives. The Executive may be awarded such annual bonuses thereunder

as may be approved by the Compensation Committee based on corporate, individual

and business unit performance measures, as appropriate, established or approved

from time to time, by the Compensation Committee. Any annual bonus shall be paid

in cash in a lump sum no later than March 15 following the year for which the

annual bonus is paid, unless deferred at the Executive's option in accordance

with the provisions of any applicable deferred compensation plan of the Company

or it subsidiaries in effect from time to time and in compliance with Section

409A of the United States Internal Revenue Code of 1986, as amended (the

"Code"). Nothing in this Section 5 shall confer upon the Executive any right to

a minimum annual bonus.

6. EMPLOYEE BENEFIT PROGRAMS.

During the term of the Executive's employment under this

Agreement, the Executive shall be entitled to participate in all employee

benefit programs of the Company as are in effect from time to time and in which

similarly situated senior executives of the Company are eligible to participate.

7. BUSINESS EXPENSE REIMBURSEMENT AND FRINGE BENEFITS.

During the term of the Executive's employment under this

Agreement, the Executive shall be entitled to participate in the Company's

travel and entertainment expense reimbursement programs and its executive fringe

benefit plans and arrangements, all in accordance with the terms and conditions

of such programs, plans and arrangements as in effect from time to time as

applied to the Company's similarly situated executives.

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8. TERMINATION OF EMPLOYMENT.

(a) TERMINATION DUE TO DEATH. In the event the Executive dies

during the term of employment hereunder, the Executive's spouse, if the spouse

survives the Executive, (or, if the Executive's spouse does not survive him, the

estate or other legal representative of the Executive) shall be entitled to

receive the Base Salary as provided in Section 4, above, at the rate in effect

at the time of Executive's death, to be paid in accordance with the Company's

regular payroll practices through the end of the sixth month after the month in

which the Executive dies. In addition to the above, the estate or other legal

representative of the Executive shall be entitled to:

(i) any annual bonus awarded in accordance with the Company's

bonus program but not yet paid under Section 5, above, to be paid at

the time such bonus would otherwise be due under the applicable

program, and reimbursement of business expenses incurred prior to death

in accordance with Section 7 above,

(ii) within 45 days after the date of death, a pro rata bonus

for the year of death in an amount determined by the Compensation

Committee, but in no event less than a pro rata portion of the

Executive's average annual bonus for the immediately preceding three

years (or the period of the Executive's employment with the Company, if

less),

(iii) the rights under any options to purchase equity

securities of the Company or other rights with respect to equity

securities of the Company, including any restricted stock or other

securities, held by the Executive determined in accordance with the

terms thereof,

(iv) for a period of six months following the Executive's

death, continued medical benefit plan coverage (including dental and

vision benefits if provided under the applicable plans) for the

Executive's dependents, if any, under the Company's medical benefit

plans upon substantially the same terms and conditions (including cost

of coverage to the dependents) as is then in existence for other

executives during the coverage period; PROVIDED, THAT, if the

Executive's dependents cannot continue to participate in the Company

plans providing such benefits, the Company shall otherwise provide such

benefits on substantially the same after-tax basis as if continued

participation had been permitted, and

(v) the vested accrued benefits, if any, under the employee

benefit programs of the Company, as provided in Section 6, above,

determined in accordance with the applicable terms and provisions of

such programs.

(b) TERMINATION DUE TO DISABILITY. In the event the

Executive's employment hereunder is terminated due to his disability, as

determined under the Company's long-term disability plan, the Executive shall be

entitled, subject to Section 25 hereof, to:

(i) the Base Salary as provided in Section 4, above, through

the end of the sixth month after the month in which the Executive's

employment terminates due to disability, to be paid in accordance with

the Company's regular payroll practices,

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<PAGE>

(ii) any annual bonus awarded in accordance with the Company's

bonus program but not yet paid under Section 5, to be paid at the time

such bonus would otherwise be due under the applicable program, and

reimbursement of business expenses incurred prior to termination of

employment in accordance with Section 7 above,

(iii) within 45 days after the date of termination, a pro rata

bonus for the year of termination in an amount determined by the

Compensation Committee, but in no event less than a pro rata portion of

the Executive's average annual bonus for the immediately preceding

three years (or the period of the Executive's employment with the

Company, if less),

(iv) the rights under any options to purchase equity

securities of the Company or other rights with respect to equity

securities of the Company, including any restricted stock or other

securities, held by the Executive, determined in accordance with the

terms thereof,

(v) for a period of six months following the termination of

the Executive's employment, continued medical benefit plan coverage

(including dental and vision benefits if provided under the applicable

plans) for the Executive (and the Executive's dependents, if any) under

the Company's medical benefit plans upon substantially the same terms

and conditions (including cost of coverage to the Executive) as is then

in existence for other executives during the coverage period; PROVIDED,

THAT, if the Executive cannot continue to participate in the Company

plans providing such benefits, the Company shall otherwise provide such

benefits on substantially the same after-tax basis as if continued

participation had been permitted; PROVIDED FURTHER, HOWEVER, that, in

the event the Executive becomes reemployed with another employer and

becomes eligible to receive medical benefits from such employer, the

medical benefits described herein shall immediately cease, and

(vi) the vested accrued benefits, if any, under the employee

benefit programs of the Company, as provided in Section 6 above,

determined in accordance with the applicable terms and provisions of

such programs.

(i) The employment of the Executive under this Agreement may

be terminated by the Company for Cause, such termination to be effective upon

the Company giving the Executive written notice of termination in accordance

with the provisions of this Agreement. For this purpose, "Cause" shall mean:

(A) conviction of the Executive of a felony involving moral

turpitude, dishonesty or laws to which the Company or its Affiliates

are subject in connection with the conduct of its or their business;

(B) the Executive, in carrying out his duties for the Company

under this Agreement, has been guilty of (1) willful misconduct or (2)

substantial and continual refusal by the Executive to perform the

duties assigned to the Executive pursuant to the terms hereof;

PROVIDED, HOWEVER, that any act or failure to act by the Executive

shall not

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<PAGE>

constitute Cause for purposes of this Section 8(c)(i)(B) if such act

or failure to act was committed, or omitted, by the Executive in good

faith and in a manner he reasonably believed to be in the overall best

interests of the Company, as the case may be. The determination of

whether the Executive acted in good faith and that he reasonably

believed his action to be in the Company's overall best interest, as

the case may be, will be in the reasonable judgment of the General

Counsel of the Company or, if the General Counsel shall have an actual

or potential conflict of interest, the Compensation Committee; or

lawful policy or requirement duly adopted by the Company Board and the

continuance of such refusal after receipt of written notice.

(ii) In the event of a termination for Cause under Section

8(c)(i), above, the Executive shall be entitled only to:

(A) Base Salary as provided in Section 4, above, at the rate

in effect at the time of his termination of employment for Cause,

through the date on which termination for Cause occurs, to be paid in

accordance with the Company's regular payroll practices,

(B) the rights under any options to purchase equity securities

of the Company or other rights with respect to equity securities of the

Company, including any restricted stock or other securities, held by

the Executive, determined in accordance with the terms thereof, and

benefit programs of the Company, as provided in Section 6, above, and

reimbursement of properly incurred unreimbursed business expenses under

the business expense reimbursement program as described in Section 7,

above, determined in accordance with the applicable terms and

provisions of such employee benefit and expense reimbursement programs;

PROVIDED that the Executive shall not be entitled to any such benefits

unless the terms and provisions of such programs expressly state that

the Executive shall be entitled thereto in the event his employment is

terminated for Cause (as defined in this Agreement or otherwise).

(d) TERMINATION WITHOUT CAUSE.

(i) Anything in this Agreement to the contrary

notwithstanding, the Executive's employment may be terminated by the Company

without Cause as provided in this Section 8(d). A termination due to death or

disability, as described in Section 8(a) or (b), above, or a termination for

Cause, as described in Section 8(c), above, shall not be deemed a termination

without Cause under this Section 8(d). For the avoidance of doubt, if a notice

of non-renewal of this Agreement pursuant to Section 2 is issued by the Company

and, within six (6) months thereafter, a written notice is issued (x) by the

Company to the Executive of its intention to terminate the employment

relationship with Executive at the end of the term or (y) by the Executive to

the Company of Executive's intention to terminate the employment relationship

with the Company at the end of the term, the termination of the Executive's

employment at the end of the term shall be considered a termination by the

Company without Cause hereunder.

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(ii) in the event the Executive's employment is terminated by

the Company without Cause (x) prior to a Change in Control (other than as

provided in the last paragraph of Section 8(d)(iii), in which case the

provisions of Section 8(d)(iii) shall apply in lieu of this Section 8(d)(ii)) or

(y) following the Post-Change Period (as hereinafter defined), the Executive

shall be entitled, subject to Section 25 hereof, to:

(A) Base Salary as provided in Section 4, above, at the rate

in effect at the time of his termination of employment without Cause,

through the date on which termination without Cause occurs, to be paid

in accordance with the Company's regular payroll practices,

(B) provided the Executive executes and does not revoke a

general release of claims against the Company and its affiliates in

form and substance satisfactory to the Company, a cash lump sum payment

made within 30 days after termination of employment equal to (x) two

times the Executive's annual Base Salary, at the annual rate in effect

in accordance with Section 4, above, immediately prior to such

termination and (y) one times the higher of the targeted annual bonus

for the year of such termination, if any, or the average of the

Executive's annual bonus payable by the Company for the three years

immediately preceding the year of termination (or such shorter period

during which the Executive has been employed by the Company),

bonus program but not yet paid under Section 5, above, to be paid at

the time such bonus would otherwise be due under the applicable

program, and reimbursement of business expenses incurred prior to

termination of employment in accordance with Section 7 above,

(D) the rights under any options to purchase equity securities

of the Company or other rights with respect to equity securities of the

Company, including any restricted stock or other securities, held by

the Executive, determined in accordance with the terms thereof,

(E) for a period of twenty-four months following the

termination of the Executive's employment, continued medical benefit

plan coverage (including dental and vision benefits if provided under

the applicable plans) for the Executive (and the Executive's

dependents, if any) under the Company's medical benefit plans upon

substantially the same terms and conditions (including cost of coverage

to the Executive) as is then in existence for other executives during

the coverage period; PROVIDED, THAT, if the Executive cannot continue

to participate in the Company plans providing such benefits, the

Company shall otherwise provide such benefits on substantially the same

after-tax basis as if continued participation had been permitted;

PROVIDED, HOWEVER, that, in the event the Executive becomes reemployed

with another employer and becomes eligible to receive medical benefits

from such employer, the medical benefits described herein shall

immediately cease, and

(F) the vested accrued benefits, if any, under the employee

benefit programs of the Company, as provided in Section 6 above,

determined in accordance with the applicable terms and provisions of

such programs.

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<PAGE>

(iii) In the event the Executive's employment is terminated by

(x) the Company without Cause within the twenty-four month period following a

Change in Control (as defined in Exhibit A hereto) (the "Post-Change Period") or

(y) the Executive terminates his employment for "Good Reason" (as defined in

Exhibit B hereto) during the Post-Change Period, the Executive shall be entitled

to the following, paid in the case of amounts set forth in (A), (B), (C) and (D)

below, subject to Section 25 hereof, within 30 days after termination of

employment:

(A) Base Salary as provided in Section 4, above, at the rate

in effect at the time of his termination of employment, through the

date on which termination occurs,

(B) a cash lump sum payment equal to two times the Executive's

annual Base Salary, at the rate in effect in accordance with Section 4,

above, or immediately prior to such termination or Change in Control,

whichever is greater,

annual bonus awarded to the Executive by the Company in the three years

prior to the year in which the Change in Control occurs (or shorter

period during which the Executive had been employed by the Company);

PROVIDED such bonuses shall be at least equal to the targeted annual

bonus, if any, for the year of such termination,

(D) an amount equal to (i) the higher of (x) the bonus

actually awarded to the Executive by the Company for the year

immediately preceding the year in which the Change in Control occurs or

(y) the targeted amount of bonus, if any, that would have been awarded

to the Executive in respect of the year in which the termination of

employment occurs, multiplied by (ii) a fraction, the numerator of

which is the number of months or fraction thereof in which the

Executive was employed by the Company in the year of termination of

employment, and the denominator of which is 12,

(E) options to purchase equity securities of the Company or

other rights with respect to equity securities of the Company held by

the Executive shall immediately vest in full and shall continue to be

exercisable for three years from the date of termination of employment,

notwithstanding the Executive's termination of employment, or the

original full term of the option or other right, if shorter,

(F) for a period of twenty-four months following the